In The News
Motor fuel prices unlikely to fall as fast as oil
Not so fast. That's the message for drivers hoping a recent drop in oil prices will soon show up at the pump.
Oil has dropped $9 per barrel, or 9.1 percent, in less than two weeks.
Gas prices tend to lag changes in oil, but experts don't expect a
significant move lower until the middle of October.
Oil ended at $89.98 on Wednesday, down $1.39, or 1.5 percent. The
national average price for gas was $3.805 per gallon, a record high for
this time of year, and up 31 cents from the same date last year.
Gas prices should be at a record for early October when President
Barack Obama debates Republican challenger Mitt Romney next week in
Denver. The focus of the debate will be on the economy and domestic
policy. High gas prices usually cut into consumer spending, which
accounts for about 70 percent of economic activity.
Gas has remained stubbornly high although economic growth is tepid and
demand for gasoline is lower than a year ago. Oil rose about 25 percent
from late June through late August. More recently, refinery issues
have tightened the supply of gas on both coasts. And there are
lingering effects from Hurricane Isaac, which disrupted refineries and
imported oil deliveries along the Gulf Coast.
Prices are at or above $4 per gallon in Alaska, California,
Connecticut, Hawaii, New York and Washington, according to AAA, Wright
Express and the Oil Price Information Service. The lowest prices, which
range from $3.546 per gallon to $3.656 per gallon, are in Texas, the
lower Midwest and the South.
It probably will be a few more weeks before supplies build back up in
certain markets and lead to a noticeable decline in pump prices, said
Tom Kloza, chief oil analyst at Oil Price Information Service.
He predicted that gas would drop into a range between $3.25 per gallon
to $3.50 per gallon by Thanksgiving. The highest price voters ever paid
while heading to the polls falls in that range: $3.41 on Nov. 8, 2011.
In 2008, when Obama defeated John McCain, gas had dropped to $2.41 by
Election Day as the economy slid deeper into recession.
Oil last closed below $90 per barrel on Aug. 2. Wednesday's drop came
as protests in Greece and Spain offered visible reminders that Europe
still is struggling to resolve its debt crisis. The protests are
occurring ahead of spending cuts and tax hikes designed to help those
countries control debt. Such austerity measures crimp the need for oil
and oil byproducts like gasoline and diesel.
Brent crude, which is used to price international varieties of oil, fell 41 cents to $110.04 per barrel in London.
Other futures prices on the New York Mercantile Exchange:
— Heating oil was flat at $3.1068 per gallon.
— Wholesale gasoline rose 11.4 cents to end at $3.08 per gallon.
— Natural gas gained 9.9 cents to $3.023 per 1,000 cubic feet.
Kevin Jones of The Trucker staff can be reached for comment at [email protected].
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